How To Buy A Freehold Property For $600,000 In Today’s Toronto

If “thirty is the new twenty,” which I friggin’ hope it is, since I’m turning 35-years-old this summer, then $600,000 is the new $500,000 when it comes to freehold houses in Toronto.

I don’t want to say, flat out, that you can’t get a freehold home for $500,000 in Toronto, but it’s getting tougher and tougher to find houses that are even priced that low, let alone sell for anything close to that.

So if you find yourself in this camp, you’re going to have to make a sacrifice, or two, or three.

Let’s go through a list of items you NEED to evaluate before, and during, your search for an entry-level home in Toronto…

TorontoSkyline

If you’re a would-be home-buyer in Toronto, heed my warning: do not watch the TV show called “House Hunters.”

There’s nothing worse than losing in a 12-offer melee on that $599,000 listing at Coxwell & Danforth, then going home and watching people shop for 4-bed, 4-bath houses for $175,000 in Orlando, Florida.

The worst part is: the people are picky!  We’re watching this show thinking, “Damn, son, come to T-Dot and see what $175,000 gets you.  A parking space at Trump Towers, maybe”

And here are these picky, critical, and often rude buyers saying, “I really don’t like the yellow wall-colour,” as if they’ve never met this guy:

Painter

If you’re looking to buy an entry-level house in Toronto right now, and you’re well-informed, you’re probably aware that $600,000 is the new “magic mark” (not to be confused with Magic Mike…), as it’s getting increasingly tough to find anything in the $500’s

Some of you reading this might follow, “It’s getting increasingly tough to find anything in the $600’s as well,” but it all depends on what you’re looking for.

When I meet with a new buyer, I tell them the brutal truths about the Toronto real estate market.

Why set them up for disappointment?

Buying a freehold property in Toronto isn’t easy, no matter what price point you’re in.  Over $3,000,000 right now?  Take your pick.  But for the rest of the market, multiple offers and over-asking are the norm.

The “bottom end” of the Toronto freehold market could be anything from $500,000 – $700,000, and while I know that’s a massive gap, it all depends on what your expectations are.

So when looking for something entry-level, for those that are scratching and clawing to get there, I tell them, rather plainly, “You have to make one major concession, and quite possibly two.”

From there, I explain the following, outlining several compromises and concessions they can make:

1) Location

This has to come first.  It just has to.

When we’re talking about location, we can almost break it down into sub-categories.  But basically we’re talking about location as it pertains to proximity to TTC, proximity to a “main drag,” and the overall style and demographic of the neighbourhood.

If you took a house that was a half-block south of Danforth Avenue, and compared it to a house that was between Gerrard & Dundas, there would be a massive premium for the former, not just because it’s close to transit, but because Danforth Avenue is that “main drag” of commercial and retail.

Take a look at this map:

NoMan's

People want to be close to the Danforth, at the north end, and they want to be close to Queen Street, at the south end.

But that box in the middle?  That’s what a lot of my buyers refer to as “no man’s land,” since it’s in the middle, has inferior access to transit, and inferior commercial/retail.

Make no mistake – I’m not dissing this area.  In fact, it offers a tremendous amount of value, and I have clients on Ivy Avenue, Bloomfield Avenue, and Woodfield Avenue – all of whom bought there because it was cheaper.

So if you’re willing to give up being “steps to trendy Queen Street,” then maybe that $630,000 house is only $575,000 if it’s just north of Gerrard Street East.

2) 3-Bedroom vs. 2-Bedroom

Outside of location, this is the biggest decision you have to make.

And more and more of my $600’ish clients are putting this before location.

It’s not necessarily a matter of how big you want your house to be today, or how many children you have to fill those bedrooms today (most of my buyers have none) but rather whether or not you want to move again in 3-5 years if you need the space for a second child, or your spouse’s home gym…

I tell my clients rather bluntly, “You do not want to call me in three years, tell me you need to find a bigger house, and then pay me 5% to sell your house, and pay land transfer tax to the the provincial and municipal governments.”

So here is where the compromises start to come into play.

If you can buy a gorgeous, fully-renovated, 2-bed, 2-bath house on a nice street for $650,000, or you can buy a 3-bed, 2-bath house, on a lesser street, in not-as-good shape for the same price, which one do you take?

The responses would be split 50/50 on that, and thus my job keeps me on my toes…

3) Parking

This one is pretty simple – you either have parking, or you don’t, and it can save or cost you $50,000.

The hierarchy of parking goes as follows:
1) Private Driveway
2) Garage w/Lane Access
3) Front Pad Parking
4) Mutual Drive w/Backyard Parking
5) No Parking

Debate whether a mutual drive is more coveted than parking via lane access (which happens to have a garage), but that’s basically your most common parking options in Toronto.

The houses we’re talking about for $600’ish on the east side will usually have lane parking, or no parking.  You see the odd front parking pad, but it’s not exceptionally common.

Then comes the houses that advertise having parking on MLS, when in fact the house has a mutual driveway whereby you can fit a bicycle, Smart Car, or Ford Model T from the early 1900’s when these damn things were built.

You can get two street parking permits, per household, on most of these streets.

While I leave the decision-making up to my buyers, I tell them one of the first things on this list they should scratch is owned parking.

4) Finished Basement

This is yet another thing I would go without, for two reasons:
1) It takes around $50,000 off the price of the house
2) It gives you the opportunity to add value later.

As with everything on this list, we can do a “what if the house had blank” scenario, and in this case, a $700,000 house with a finished basement might only cost you $650,000 if the basement is unfinished, and just used for laundry, and storage.

So ask yourself if you “need” the finished basement now, and I’m sure the answer is a resounding “no.”

If you’re coming from a condo, or a rental, chances are good that you’re in less than 800 square feet, and now suddenly you’re looking at two floors, 3-beds, and 1,400 square feet with a backyard.  You don’t “need” the space in the finished basement, at least, not today.

When you have kids?  Sure, it would be great to have a play room.

But if it makes the difference between being able to buy today, or having to save more and buy in a year when prices will undoubtedly be higher, then spend less money on a house with an unfinished basement, and get into the market.

Plus, if you spend $30,000 renovating the basement in five years when you have the money, you’re probably adding $50,000 in value.

5) Second Bathroom

The second bathroom will more than likely be in that finished basement we just talked about, so these two go hand-in-hand.

Many buyers for $600’ish houses are couples coming from 2-bed, 2-bath condos, where he uses one bathroom, and she uses the other, and they live together in harmony in part because of that arrangement!

So suddenly when you’re looking at 3-bed, 1-bath houses with an unfinished basement, you feel like you’re giving something up.

Just remember that the basement can be finished one day, and that your 3-bedroom house is a better investment than your 2-bed, 2-bath condo, and it’s what you’re going to grow into.

6) Lot Size

Some of my buyers immediately look at the lot size when they first eye the listing.

And then, some of my buyers don’t give it a single thought.

Take a set of buyers to a house have them walk the lot, and then ask them “How deep do you think this is?”  They could be off by 100 feet – many have no clue.  50 feet?  100 feet?  200 feet?

For those folks, lot size is just a number.  Like age.

Some of you might have thought, “Oh give it a rest” when I complained about turning 35-years-old this year, and some of you might be happy that I have ten years on you.  It’s a matter of perspective.

So while some of my buyers can say, “I grew up on a 2-acre farm outside Guelph,” and they can’t imagine spending $600,000 on a 15 x 80 foot piece of land, others couldn’t possibly care less.

It’s what the lot has that is important.

Does it have a backyard?  Or does it just have a back-deck that’s built to the lot line?

7) Semi-Detached vs. Detached

I put this one last because, honestly, if you think you’re getting a detached house for $600,000, then you have set the bar really, really high.

But this does come into play sometimes, along with the other criteria on the list.

Think about a detached bungalow on a small lot, versus a 2-storey semi-detached on a deeper lot.  Some folks want the freedom and potential of the detached house, and some want the interior square footage of that 2-storey semi-detached, today.

Personally, I think buyers in this price point need to accept that they’re getting a semi-detached house from the onset, and be pleasantly surprised if they get a steal in the form of a detached.

As you can see from this list, you have to play one item off the other, over and over again.

Take a semi-detached, with front pad parking, 2-bed, 2-bath, with a finished basement, on a short 80-foot lot, and then compare it to a detached, no parking, 3-bed, 1-bath, unfinished basement, on a deep 120-foot lot.

Which one would you rather have?

Now throw location into the mix, and you can really have fun.

Every buyer I put into a $600’ish house these days has to make concessions, and what concessions those buyers think they’re going to make at the onset, might not be the ones they make in the end.

It’s important to get out and start looking at houses, and get a feel for those items noted above.  Some of the decisions might have to be made right away, and others can often wait until you’re looking at a potential house.

But if you want to get into a house for $600,000 in Toronto these days, don’t ask yourself what you want, but rather, what you can do without…

31 Comments

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  1. DocBenway says:

    We went to an open house on the east end, only to run into the same neighbor that had earlier that week come out in march in just his robe to inform us about property lines and that we were not allowed to walk along the south side of the property.

    At the open house he was informing the entire crowd of property lines. The house was detached and stayed on the market. Even though it was a fixer upper, it went quite a bit under asking. I am guessing others didn’t want to have constant run ins with a half naked neighbor.

  2. Paully says:

    The absolute most valuable thing that your new home could have, bar none, is a good neighbour. You can paint, renovate, landscape, expand, modify, and decorate to your heart’s content. If your neighbour is an a-hole, you can’t do anything about it except tolerate it or move.

    I’d take decent neighbours over any other feature that a house can have!

    1. Wertt says:

      Agreed. Went to see a semi detached house with our agent yesterday that had great potential. Attached neighbour was nice. However house had a mutual drive and the other neighbour had built a fence up the drive essentially appropriating the entire thing for themselves from half way down to the backyard. And then came out and sniped at us for leaving the gate open because they have a dog. We wrote off that house immediately.

  3. Chroscklh says:

    Is a little crazy but you make the good points. Is funny, how quick own desire change when see market. I do pretty well, able buy expensive house, I so proud. I bring family from Europe they say “Where pool? Where cinema? For this money?!” I say “Where pool? I happy have main floor powder room?” I in this country 3 yr! Back home, I no live in house unless cinema and turkish spa in basement. Oh well – here less rebel, less frame by corrupt govt and weather much improve! Is funny compare list priority here vs back home my country – we say 1) house near front line of war? No? Big check 2) house cover in cloud of smoke from manufacture or smell like petroleum? 3) housse have bear or must provide own? etc etc

  4. crazyegg says:

    Hi All,

    Great article which I think will help a lot of hunters out there in Toronto.

    Some thought:
    With the exception of older buyers does anyone really place an emphasis on having a detached as a critical element to have (vs. a semi)?

    My experience is that this is an outdated decision driver in central Toronto area for younger clients looking for a freehold house.

    Semi = 0 feet away from your neighbour on one side and 2 feet away from your neighbour on the other side.
    Detached = 2 feet away from your neighbour on either side.

    Is there really a difference for the AVERAGE freehold house buyer? I don’t think so.

    Scoop up the semi “bargains” out there 😉

    Regards,
    ed…

    1. jeff316 says:

      The difference between living with a neighbour that is a smoker, or hoarder, or loud music player, or screamer in a semi vs. in a detached is huge.

    2. Julia says:

      I think detached vs semi is still a huge consideration for a lot of buyers. We will be looking to upgrade from our North Toronto 3 bed 2 story detached in the next couple of years and would never consider a semi – even if it’s in Rosedale.

      Another way to save would be to buy in a great location but on a busier street – it may be noisier but less expensive than on side streets.

      1. crazyegg says:

        Hi,

        Yes, I realize that a segment of the home buyer population in Toronto will always insist on detached and automatically disqualify a semi. Does it have that much merit though?

        Put another way, is it rational to discount a house simply because it is a semi when all other required elements have been met?

        * Rats and termites have legs: They can move to any house be it a semi or detached as they please.
        * Music noise: Noise can come from anywhere. My neighbour complained about noise one time when I had a party. She was in a DETACHED house living 2 feet away. I had my windows up in my semi house.
        * Hoarders: A friend of mine lives in a detached bungalow. Her next door neighbour is a hoarder. The junk is piled high on the front lawn and driveway.

        Also, are these “stereotypical” issues even issues with newer building code and technologies?

        Regards,
        ed…

        1. Mike says:

          Okay you don’t know a lot about physics and that’s okay. Sound can travel across air you’re correct, but it’s more likely to travel through a conductor, studs, nails, plaster and drywall have all been effective conductors in driving people nuts. Oh, and you’re stairs are most likely situated on the adjoining wall so you hear every time they go up or down.

          That said, walk through any neighbourhood and look at semi’s, you will sometimes see one nice one and one that’s falling apart. If that happens to you then you take a massive hit on your valuation because of how bad your neighbour looks.

          But all that is the best case scenario, there was a story in the National Post about a month back about a young couple who bought a semi over at Pape and Danforth. Turns out the neighbour wanted to renovate and one day when they got home the found out that the house next door (the adjoining semi) had been demolished illegally. This caused the couples home to sink into the ground and be condemned. The whole time they had to continue paying the mortgage while renting elsewhere. Cause the marriage to break down and eventually the husband killed himself.

          So kind of what Jay is saying, you have limited land value with a semi.

          1. Paully says:

            What an unbelievably horrible story about the couple with the semi! It made me feel awful just reading about it. I can’t imagine what it was like for them. Just terrible.

            http://news.nationalpost.com/toronto/home-sweet-homewreck-this-is-the-worst-reno-story-you-will-ever-hear

          2. Geoff says:

            While my wife and I were open to a semi, we had a clear and loud preference for a detached house. I’d say now that I’m older and have children, the desire for a detached is greater – kids are LOUD.

    3. Jay says:

      When we bought our house a couple of years ago, we were open to both a semi or detached home. Our 2 final contenders (same price) were an almost new semi on a 23 foot lot with 2 car garage or a 1920s partly renovated detached home with driveway on a 32 foot lot, same neighbourhood. The main reason we chose the detached home: land value. We knew the house could be destroyed and the lot on its own would be worth almost as much as what we paid – not so for the new semi.

      1. Aly says:

        This argument is false. You can tear down a semi and leave its twin in place. Totally possible.

  5. Mike says:

    The difference between a $500,000 house and a $1,000,000 house is the cooking range

    Next time you see a house go for a million and you can’t believe anyone would pay that much for a house in that area look at the pictures of the kitchen, you’ll see a Wolfe range.

    1. Kyle says:

      Please tell me you’re joking. I don’t think you typically find neighbourhoods where 500K houses exist alongside 1M houses. And where this situation does exist (Parkdale maybe…but probably not even) the difference would have more to do with other factors, beyond a Wolf (there is no ‘e’ in the name) range. Such as the 500K house was used as a crack den, meth lab or grow op. In which case you can add a 60″ Wolf, an AGA Cooker or La Cornue range to that 500K house and it still won’t be 1M.

      1. Izzy Bedibida says:

        Try looking at the Jane/Wilson aria. Lots of million dollar/approaching million dollar homes being built where 500K bungalows used to sit, with 500-600K bungalows as neighbors on either side. Try selling that house when your neighbors are 500-600K bungalows.

        1. Kyle says:

          True, but the difference between the 500K house and the 1M house is much more than what stove is in the kitchen.

          1. Mike says:

            Check it out Kyle, you will see a house purchase for a $500m and sold for $1mm and every time they have a Wolfe range.

            Young couple walks in, sees the range and thinks that it’s a quality build because of the money spent on appliances.

            Riverdale and north of Danforth is a great example of it. Once saw a house being done just north of Danforth, beautiful third floor patio off the master and “chef’s kitchen” including the beloved Wolfe range. House was listed at $700m sold for $1.3mm.

            Week after the sale, the deck boards on the front porch started popping and warping because the stained spruce boards had got wet in the rain.

          2. Kyle says:

            OMG you aren’t joking. You are actually trying to tell people that a $5 – 15K stove will increase a house’s market value by $500K. This is just patently wrong.

            Pretty sure you are referring to 98 Gough Ave. First let me say no 3 storey homes on a 17 foot lot has sold in that area for $500K in over a decade. The reason it sold for $1.275M is not just because of the $5K range (which was a Thermador, not a Wolf – again there is no ‘e’ in Wolf). It is because of the many hundreds of thousands of dollars spent gutting, opening it up and renovating top to bottom with ridiculously high end finishes. You have massively confused correlation with causation. Yes Wolf ranges are found in high spec homes, and high spec homes sell for a lot more money. That is called correlation and does NOT equate to Wolf ranges cause houses to sell for a lot more money.

          3. Mike says:

            Wow Kyle, I had you down for being smarter than that. Yes, you’re right, just putting a Wolfe range does not increase the price of your house by half a million. My observation was that when you look at flipped homes, they have ridiculously expensive ranges in homes that don’t justify that level of expense on a kitchen range. I don’t care what you say, your cook top should not cost more than three mortgage payments.

            The Wolfe range is indicative of what buyers are looking for, they look past the $500,000 fixer-upper to pay an inflated valuation on a home that has been flipped. They like the fact that they can move in on Friday and entertain on Saturday. The love the fact that everyone will comment on what a great stove they have.

            98 Gough is a great example, the flip was done poorly and the house sold for $1.3mm yet the detached next door sold for $800,000 a month or two earlier. Difference? One had been flipped while the other needed a reno. In other words, people wanted the house with the Wolfe range rather than the better value home where you could put in the $500,000 yourself and end up with a tricked out fully detached home on the exact same street with a garage that fits two cars.

          4. Kyle says:

            A) If you meant to use the stove as a symbol for the over-improvement that flips represent that’s VERY different than saying, “The difference between a $500,000 house and a $1,000,000 house is the cooking range…you’ll see a Wolfe range” – your original words

            B) You are right that the reason people buy these flipped houses, is because they want it “done”. But the real reason most people buy flips, is that and they want nothing to do with the act of getting it “done”. I completely agree they are paying a premium to get it (and possibly risking uncertain build quality by buying from a flipper), but i also think it is naive and patronizing of you to presume these are people blinded by the stove and don’t actually know full well they are paying a convenience premium when they sign on the line. These are not 5% down, first time buyers plunking down 1.3M, these are people who shudder at the idea of undertaking a reno themselves.

  6. Kyle says:

    While you alluded to it with the picture of the Painter, I personally think finishes and style is worthy of it’s own category. If there is ONE thing i would advise first time buyers to sacrifice on it would be finishes and style. Definitely lots of money to be saved by buying a solid (get a home inspection) but dated looking house and gradually upgrading the cosmetics vs competing against 10 other buyers for a house that is done to the nines and staged to the max.

    I’d take a tired, dumpy ugly house in a good location, over a completely done house in a lesser location any day of the week. You can always upgrade the finishes, but you can’t pick up the house and move it to a better location. And in a few years when you want to move up and you’ve completed your upgrades, your house will be the one with 11 buyers bidding for it.

    1. jeff316 says:

      I think there is a lot of value in the houses with only one washroom. My impression, albeit completely unscientific and possibly not warranted, is that the many buyers selected 2+ washrooms for the automated listings they receive through their agents, potentially missing out on 1 bathroom properties

  7. Name says:

    David, #5 on your parking hierarchy should be right-of-way. It is definitely the next worst thing to no praking at all. And it’s a guaranteed source of ongoing acrimony between neighbours.

  8. Name says:

    Sorry David but think you’re a bit off on your mapped example. A house just sold on Hiawatha for over a million yet none on Monarch Park have done that yet. Also the community on Hiawatha far surpasses that on Monarch. Is there a annual street party and facebook group for Monarch? Yes Monarch may be closer to the subway but Hiawatha offers you a much better life with equal access to both the Queen and Gerrard streetcars. Understand your example for those properties north of Gerrard but it’s only because they’re so close to the tracks not because of their drought of an oasis. Not picking on those streets in particular but think your example would have been better comparing a square around Mortimer and not Dundas. Still luv ya though!

    1. In the hood says:

      While the houses on Monarch Park may not have crossed the 1 million threshold (although last year there were a few in the 900,000s, but few are the size of the larger ones on Hiawatha), those of us living in this neighbourhood may disagree with your assessment that it is inferior. There are Facebook groups for streets and parks, lane way dinners, street parties as a really excellent and engaged community. I recently moved here for both the reaso s described by David above, but also for the community spirit that we encountered, including those working together to actively improve local resources ie the Friends of Felstead park, who are a lovely engaged group who got major improvements through for what is now a lovely community hub. I think the Hiawatha community is also amazing.

    2. @ Name

      Like I said – not dissing the area. In fact, I think it offers a ton of value.

      Save for a handful of outliers, however, houses just off Danforth will always come at a premium if you’re comparing to the identical property just off Gerrard.

      1. crazyegg says:

        Hi All,

        Gerrard East (i,e, Little India) has the hipster effect going for it. Plus it has a bus route. The holy grail for that area will be the future commercial gentrification along Gerrard. Plus the cache of saying that you live in “leslieville”.

        Dundas East is DOA. There is no commercial (or even even potential for a commercial strip) viability. However, the main negative there is the lack of a bus route. Hence, the relative lower values. This is key detractor for female buyers and renters. The rents there reflect this also.

        Regards,
        ed…

  9. Amral says:

    David can you later write about house prices in the Scarborough area. Say east of Mcowan Road. I have seen detached at around 550-700K listed

    1. moonbeam! says:

      I’ve always believed Scarborough is great value….

      1. Jane says:

        I just bought a house in Scarborough (Vic Park and Danforth), detached, 2 bedroom, parking, for $350k. Sure, my neighbourhood is scuzzy as hell and the house needs about $50k in work, but thems the breaks. It’s a start.

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